House of Commons Hansard #87 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was trade.

Topics

The House resumed consideration of the motion that Bill C-28, An Act to amend the Financial Consumer Agency of Canada Act, be read the second time and referred to a committee.

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3:15 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, I am pleased to rise today to point out some of the glaring problems in the government's bill, in its attitude to consumer protection in general and in regard to financial literacy specifically.

Obviously, a basic understanding of financial literacy is a good thing. Understanding how much the difference between a 5% and a 5.5% APR will cost over the lifetime of a loan, how long it will take to pay off a credit card if only the minimum payment is made each month, how much one needs to save each month for school or a car or to put money away for a down payment on a house or for retirement is clearly a benefit. The problem is that the government seems to think that encouraging these skills is a suitable substitute for a proper regime of consumer protection, retirement security and a proper strategy for economic growth.

This bill embodies the government's strategy or, more properly, the lack of strategy in addressing the issues that really matter to working and middle-class Canadians across the country. Specifically, the bill would create a financial literacy leader, a high level bureaucrat position, with the aim of encouraging financial literacy in the general public. At the same time, the government is calling on departments and agencies to slash spending. When the media is full of stories of tens of thousands of public servants being laid off, the government's answer to addressing this issue is to create a new, highly paid position. If we could guarantee that the position would be successful, that would be defendable, but there are a number of flaws in this bill, which leads me to believe that this position has little chance of success to start with.

The terms of reference for this position are extremely vague. While the holder of the post would be required to advance financial literacy, there is no definition of what constitutes financial literacy within the bill, nor any attempt to define how we could or should advance it.

Moreover, the original recommendation to create this position was very clear on the need for an advisory council that would include labour, voluntary groups and educators, as well as business stakeholders. They would be there to direct the work of the financial literacy leader. This bill does not include any legislation to create this advisory council and, as such, there is very little in the way of accountability.

Additionally, there is no proviso in the bill that would ensure that this position would be filled by someone who is fluent in both official languages. To me, it would seem necessary that someone who is expected to teach and encourage Canadians about financial literacy would be able to communicate in both French and English.

How able are we to teach financial literacy to Canadians? Human Resources and Skills Development Canada stats tell us that 26% of Canadians struggle with basic numeracy and that 20% struggle with basic literacy. However, the same government that is trying to sell Canadians on financial literacy being the answer to the economic problem is the same one that cut $17.7 million to adult literacy programs in 2006.

Without basic numeracy and literacy skills, how does the government expect Canadians to understand some of the more complex financial vehicles, which will apparently provide for them in their retirement.

Even for people who do not struggle with numeracy and literacy, finance is not a particularly comprehensible subject. As Barry McKenna, a business columnist for The Globe and Mail, states:

Looking to financial literacy to fill the void is like asking ordinary Canadians to be their own brain surgeons and airline pilots. The dizzying array of financial products, mixed with chaotic and increasingly irrational financial markets, makes the job of do-it-yourself financial planning almost impossible--no matter how literate you are. The average credit-card agreement is as intuitive as quantum physics.

It is clear from all the money spent by banks and other financial institutions on encouraging financial literacy that they see some benefit to it, but to what end? It does not take a genius to conclude that the banks like financial literacy because it allows them to expand their customer base. Encouraging people to take out savings and investment funds creates lucrative fees for banks and brokers. In fact, according to Morningstar, an investment research company, Canadian fees for equity funds are some of the highest in the world, being, on average, around two and a half times higher than fees in the United States.

Financial literacy, in this sense, is essentially a marketing exercise to create good customers. It teaches the benefits of saving vehicles but it is not necessarily critical of how financial vehicles work. It does not criticize plans where fund managers take a substantial fee regardless of the performance of the fund. It does not highlight how funds, like the CPP, regularly outperform private funds. It does not give enough weight to the inherent dangers of investing in the stock market.

As Paul Farrell, a MarketWatch columnist for The Washington Post puts it:

In spite of all the public hype about financial-literacy programs, the fact is Wall Street [or Bay Street] doesn’t want smart investors.

Bottom line: The last thing [its] wants is 95 million investors who are wise to [its]...games. ...revenues would drop substantially if financially literacy really did work.

Even more worrying is the possibility that we increase the quantity of financial literacy available but without ensuring its quality. This has two dangerous and interlinked consequences. The first is that the model shifts all the blame off banks and onto consumers. At the individual level, people are to be blamed for their own uninformed choices and, at the national or even international level, systemic problems are no longer the fault of the banks that lend beyond their means but the individuals who borrowed too much. Obviously, individuals do have a responsibility to manage their own finances but the banks, hedge funds and other financial institutions have the ability to effect the economy in a much more profound way than individual consumers, and we must not forget that.

What do we do for the people who actually end up worse off due to financial investments that fail? We need to understand that some people will lose their savings when businesses go bust or when the stock market drops. This has been the way the stock market has worked since the first recognizable stock exchange opened in Amsterdam in the 17th century.

What about those people who simply do not have the type of disposable income required to invest in their futures, the people who live paycheque to paycheque, the people who have seen their wages stagnate and fall in real terms since the mid 1990s? For both of these groups of people, a social safety net and regulatory system based on so-called financial literacy is a failure.

Lauren Willis, a professor at Loyola Law School, sums up these problems. He says:

For some consumers, financial education appears to increase confidence without improving ability, potentially leading to worse decisions. When consumers find themselves in dire financial straits, the regulation through education model blames them for their plight, shaming them and deflecting calls for effective market regulation. Requiring consumers to act as their own financial experts is socially inefficient.

What should the government do to fix Canada's broken system of financial consumer protection? For a start, it could build on what it is already doing, rather than trying to reinvent the wheel. The Financial Consumer Agency of Canada has already been commended for the work it has done in regard to financial literacy by earning a public service award of excellence in citizen-focused service delivery from the Treasury Board in 2010.

If the government feels that financial literacy is something worth pursuing, why does it not spend money on programs that have already proven effective, rather than starting from scratch in a program that we cannot be sure will be successful and will likely be more expensive due to the financial literacy leader's salary and office costs?

The government should recognize that for a large portion of Canadians a lack of savings is a reflection of the disparity between the rise in the cost of living and the rise in wages over the last 15 years or so. Encouraging savings is fine for people who have disposable income after they have paid for essentials. Unfortunately, however, for all too many people, taking on debt is not a choice. It is the only way to survive.

An OECD report published in 2011 pointed out that the trend toward a less progressive tax structure and a more unequal society here in Canada began in the mid-1990s under the then Liberal government and has continued since 2006 under the Conservatives.

As Canadian economist, Jim Stanford, noted in his submission to the national financial literacy task force:

Personal savings will never constitute an important source of financial security for the strong majority of Canadians who cannot save, given the paucity of their incomes.

This argument was reported by numerous submissions to the task force but these points were noticeably absent from the final report. It simply did not meet the goal of the task force to point out that the very thing it was pushing may not have all of the answers. Financial institutions already make a large amount of money from these individuals who are forced to carry credit card debt from month to month and who are unable to keep the significant balance in their current accounts required by banks to waive the monthly service fees. If the government really wanted to give these people an opportunity to build up their own savings, then it would regulate these types of fees and the level of interest that is charged on credit cards in order to allow people to put aside a bit of money every month.

Similarly, if the government wants to ensure that Canadians have adequate savings when they retire, the way forward is not to create a new and inherently risky vehicle for private savings. There are already multiple methods for Canadians to save for their future, as RRSPs and TFSAs spring to mind, if they have the funds available to invest, and these vehicles are already supported and funded by the government. Studies have shown that the highest earning 11% of Canadians contribute more to RRSPs than the bottom 89% of tax filers combined. Because of the tax benefits of investing in RRSPs, Canadian taxpayers subsidize that contribution by the top 11% of earners to the tune of $7.3 billion in annual net tax expenditures.

The creation of pooled registered pension plans, or PRPPs, would only benefit those people who are already able to invest in their retirement. They would do nothing for the 30% of Canadian families that lack any form of retirement savings outside of the CPP.

Encouraging people to invest in a risky vehicle on the stock market is not real leadership on financial planning. It simply passes the entire risk and blame for an individual not having adequate retirement savings onto that individual. Now we have the Conservatives musing about delaying the age at which Canadians are eligible for OAS from 65 to 67. How can Canadians properly expect to plan for their retirement when the government tries to change the rules of the game?

If the government were truly interested in Canadians' retirement security and in allowing Canadians to properly plan for their retirement, it would make far more sense to say categorically that it will not change the eligibility age for the OAS and commit to the NDP plan to expand the guaranteed Canada–Quebec pension plan by phasing in an affordable doubling of benefits to a maximum of $1,920 a month. This plan has been called for by provinces across the country as it would give Canadians both the ability to plan for their retirement and a guaranteed income to ensure they can retire with dignity.

Moreover, the CPP is a much safer investment than market-based private funds and consistently outperforms the market. Even business columnists, like the aforementioned Barrie McKenna at The Globe and Mail, have pointed out the benefit of such a policy, stating:

And Ottawa could beef up the CPP, mandating Canadians sock away more money for retirement, while benefiting from the CPP's low costs.

However, so far the government and the Minister of Finance in particular have not listened to this appeal for a real and proven way of ensuring Canadians can retire with dignity.

In summary, it worries me that so much time and effort will be taken up by this piece of legislation which is little more than spin carried out by the government. If this were such an important thing for the government to move forward with, I wonder why it could not be included in the financial system review act rather than being a stand-alone act. It appears to me the only reason these did not go together was that the government hoped it could get some positive media out of this legislation. However, as I have pointed out, this legislation is deeply flawed because it does so little to address the real problems affecting Canadians. This so-called solution is the equivalent to using a band-aid to fix a broken leg.

The NDP believes in real measures to protect consumers, seniors and low-income Canadians. Unfortunately, the government is not interested in anything more than spin and publicity when it comes to this issue. At a time when the government keeps talking about spending cuts, I think there are far better ways the government could spend the funds that would be spent to bring forward this proposal.

My colleagues in the official opposition and I will continue to stand up for policies that really help hard-working Canadians. Unfortunately, this is not such a policy, which is why I will be voting against the bill as presented.

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3:30 p.m.

Newmarket—Aurora
Ontario

Conservative

Lois Brown Parliamentary Secretary to the Minister of International Cooperation

Mr. Speaker, I am very pleased that we are having the opportunity to debate this piece of legislation. I personally think that knowledge is power and the more often we can educate Canadians on their financial literacy, the better off we are going to be in the long run.

I am very pleased that many of the banking institutions in Newmarket—Aurora have seen fit to open their premises to hold seminars for constituents. They too believe that knowledge is power and that every opportunity to give people more information about financial literacy is going to be of assistance to them. I am sorry to hear that the opposition is not going to assist.

I note the bill says that we are going to collaborate and coordinate activities with stakeholders to contribute to and support initiatives to strengthen the financial literacy of Canadians. Could the member speak to institutions in his riding which may be looking to partner with us on these initiatives and work with the banking institutions that are there?

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3:35 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, I agree there are many institutions right across the country that are having to hold seminars and town halls because of the government's inaction on protecting consumers, because of the government's inaction on making sure that consumers understand their credit card bills.

The government is all talk. I said earlier that it is like cotton candy. The government's action on consumer protection is like cotton candy: it is sweet and fluffy, but there is absolutely no substance.

When we look at the financial task force report, when it talked about creating a financial literacy leader, one thing it said very clearly in the original recommendation was that the leader have an advisory council that includes educators, the banking institutions and business leaders. What is not included in the bill is that recommendation. That being said, we cannot support the bill unless there are more teeth in it.

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3:35 p.m.

NDP

Raymond Côté Beauport—Limoilou, QC

Mr. Speaker, I must thank my hon. colleague from Sudbury. I admire his candour and his clear-sightedness in the field we are discussing.

As I read the bill, basically I ask myself what the government’s objective is. It is entirely laudable to want to educate people about financial matters, but there is no way that the government can offer any lessons in that regard. It has created an undue proliferation of absolutely needless tax measures and has enormously complicated the federal tax return. The proof is statistics published a few months ago indicating that roughly half of Canadians do not complete their own tax return because it is too complicated for them.

Finally, what is the good of trying to educate people about a system that is already too complicated? I would ask my colleague what he thinks of this observation, and doubtless to elaborate.

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3:35 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, I would like to thank my hon. colleague for the question and, as our small business critic, for all of his great work on that file. This relates to small business, to consumers and to all Canadians.

Everyone in this House will agree that financial literacy is truly an important subject and an important issue for all Canadians. However, this bill does not make financial literacy the priority. It makes creating the leader of a financial literacy organization with costs that go with it the priority. There is no talk in this bill about terms of reference that are going to point to what we should be bringing forward, how we should define it and how we should advance it. Those are the things this bill needs to include.

As I mentioned before, the original recommendation from the financial literacy task force talked about ensuring there is an advisory council. This bill does not include that. If we are taking the recommendations of the financial literacy task force, which we also had some concerns with, then we need to ensure those recommendations are there. The member asked his question in French and while I am working on my French, one of the most important things is that this bill does not include a proviso that the person should be able to speak in both official languages.

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3:35 p.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, when I first read this bill I had a lot of trouble trying to figure out what the heck it was about. What on earth are the Conservatives trying to accomplish? They have created a bureaucracy with apparently no goal. There is no definition anywhere in the bill, so far as I can tell, and perhaps the member can tell me what the goal of a financial literacy leader is. What is his or her mandate? What are his or her powers? What are his or her abilities? Who are the stakeholders the person should be consulting? What the heck are they doing? Could the member help me with that?

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3:35 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, I too had a similar reaction when I first read the bill. I thought that this bill had actually become a job posting.

The Conservatives are talking about creating, bringing forward and hiring a new financial literacy leader. As the member mentioned, when we go through the bill, the mandate and the terms of reference are extremely vague. There is no definition in the bill of what constitutes financial literacy. We are not talking about how it is going to be advanced, how we are going to move forward with this. Are we going to have an advisory council like the recommendations from the national financial literacy task force brought forward?

We need to ensure that we are consulting with the people who know how to bring forward the topic of financial literacy. Let us have the business community involved. Let us have industry leaders. Let us have educators. Let us have labour. Everyone who would be involved with this needs to be able to have a say and to guide the financial literacy leader. That is not currently in the legislation. That is why we on this side of the House cannot support it, when there is no mandate and it is just spending money.

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3:40 p.m.

Conservative

Lois Brown Newmarket—Aurora, ON

Mr. Speaker, I am surprised that members say they have read the legislation, because it starts by saying that this is “An Act to amend the Financial Consumer Agency of Canada Act”, which means that this is just a small portion of what that act is all about. I wonder how the member can say that it does not specify, because it states:

“(g) collaborate and coordinate its activities with stakeholders to contribute to and support initiatives to strengthen the financial literacy of Canadians”.

This should be no surprise to the members on the opposite side of the House. We said we were going to bring this forward. It was part of our throne speech. We have been very specific about helping Canadians to understand some of the complexities of what is going on in financial markets and how they can respond as individuals to the things that are happening there.

Does the member not think that helping people get that kind of knowledge, in whatever form it comes, is going to be of benefit to his own constituents?

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3:40 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, once again I will reiterate that of course everyone in this House agrees that financial literacy is important; however, the bill does not express that in its mandate. The hon. member talks about collaboration and coordination. It does not specifically talk about the recommendations that were brought forward by the task force. We cannot go with, “Trust us, it's in there”. We have too many examples where it has not happened.

We are saying that right now as it is presented this bill does not do what it is supposed to do, which is provide a complex and mandated way forward for Canadians to improve their financial literacy.

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3:40 p.m.

NDP

Tarik Brahmi Saint-Jean, QC

Mr. Speaker, my hon. colleague from Sudbury made a comprehensive speech. One detail which he pointed out was that financial literacy should not be a substitute but a complement to actions and real measures from the government. Could he comment on that?

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3:40 p.m.

NDP

Glenn Thibeault Sudbury, ON

Mr. Speaker, it is so true. Financial literacy cannot be the one crutch we lean on to say that we have made sure everyone is educated so now we can wash our hands of what we need to do.

We need a strong economic plan. We are not seeing that. We need to ensure that consumer protection is a priority. We have seen that whittled down by Liberal and Conservative governments time and time again. We need to ensure we are standing up and protecting Canadians. This bill does not do it. We have a plan that will.

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3:40 p.m.

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, we all agree that financial literacy is important, that it is a good thing, but that is not the subject of today’s debate. The issue is whether or not this bill is going to strengthen financial literacy. And on that point I must say that I have many doubts about this bill.

As I said, we are supportive of financial literacy. Who would not be? We are deeply concerned about the lack of information in the bill. it is my hope that the government will clarify further detail in the course of this debate.

We can all agree that increasing the financial literacy of Canadians is an important goal for government, both federal and provincial. A more financially literate population would be a more prosperous population. But financial literacy is not the panacea that the Conservative Party seems to pretend it to be.

Far too often over the past six years we have been told by the government that problems like increasing post-secondary education costs and rising household debt can simply be solved by waving this magic wand of financial literacy. This is simply incorrect. There are a number of policy levers the government can operate to help solve the issues of rising household debt or runaway student debt. Increased financial literacy is one of them. My goal is not to downplay the importance of financial literacy but only to point out that it is not the only policy solution available to the government.

Let me turn now to the contents of the bill. I get the distinct impression that Bill C-28 was written on the back of an envelope, that the primary motive was probably to have an “announceable” for Financial Literacy Month last November, because it is virtually content-free. I will explain.

The bill and its supporting documents are completely devoid of any detail as to how the office of the financial literacy leader would even work. The bill does not specify if there would even be an office of the financial literacy leader or if he or she would simply be one more employee at FCAC.

Bill C-28 was a response to the recommendations of the Task Force on Financial Literacy. The task force was created as part of the 2009 budget. It reported back to the minister early last year. The task force had 30 recommendations. This legislation satisfies only a part of one of the recommendations.

The first recommendation was that the government create the position of financial literacy leader and that this person be charged with improving financial literacy across Canada. It also said the financial literacy leader should report directly to the Minister of Finance. Under this legislation this position would report to the commissioner of FCAC. Let us give the government half a point for getting recommendation 1 half right. Its total score then is one-half of one point out of thirty. If I were back in my professor days, I do not think that would be a passing grade.

The bill would also give FCAC the power to impose a levy on the banks in order to pay for its efforts in improving financial literacy. But it would also give the Minister of Finance the power to spend government money to achieve the same objective. As parliamentarians, we are yet again being asked to vote on a bill that causes the government to incur costs, spend money and perhaps tax banks without being given even a hint of the numbers involved.

Liberals, indeed all parliamentarians, should not have a problem with spending resources to improve financial literacy. However, we do want to know the order of magnitude these expenditures and the related taxes would be on. Are we talking about $100,000, $500,000, $1 million, $10 million? We have no idea, because there is nothing in the bill to tell us what this process would involve other than the naming of this one person. The question of how much things would cost is important because many of the other recommendations from the task force's report would require additional effort and financial commitment on the part of the government.

For example, recommendation 2 requires the government to establish an advisory board on financial literacy. The advisory board would help the financial literacy leader to develop a national strategy on financial literacy.

Recommendation 4 requires the national strategy to incorporate financial literacy in the school curriculums across Canada and at all levels of education. This would obviously require coordination with provincial governments and may I suggest the direct ministerial mandate asked for in the task force's first recommendation.

Recommendation 9 suggests that financial literacy material be delivered to Canadians through programs that reach Canadians directly, such as EI, CPP, OAS or the universal child care benefit. There are many such requirements and they will all cost money.

Surely the government must have some idea of the anticipated costs. Yet there is no mention of any of these recommendations or any actions to be taken or not to be taken in the bill. Therefore, we are all left totally in the dark as to what, if anything significant, this leader would accomplish, how much money it would cost and what the scope of the mandate would be.

This is not the first time that the House of Commons has been asked to vote on legislation without knowing the cost. The most prominent case that comes to mind is Bill C-10, the tough on crime compendium of bills. The government did not tell us what the additional costs would be for new prisons. We know from the Parliamentary Budget Officer that it is many billions of dollars. We know that some of those billions would be downloaded onto the provinces. The government did not come clean on that and it was a far more important case in terms of expenditure of funds than this would be. However, it is the same principle. The government wants us to pass legislation, but tell us nothing about what it would actually do and what it would actually cost.

This similar issue has caught the attention of the government operations committee, which is currently conducting a study on how Parliament considers supply and more broadly how we as parliamentarians are presented with information on the government spending plan. I would certainly suggest that not knowing the cost of bills before we vote on them is just one part of this problem.

Back to the contents of the bill, there are other existing mechanisms at the disposal of the federal government to promote financial literacy. For example, the Canadian Foundation for Economic Education was created in 1974 as a non-profit, non-partisan organization with the goal of promoting greater financial literacy. It already has tremendous buy-in from government and from the private sector. A quick scan of its website indicates that its list of board of directors include prominent members of the private, post-secondary and labour sectors. On the government side, the CFEE has relationships with the federal Department of Finance and numerous ministries of education provincially.

I know this group from my earlier incarnation with the Royal Bank as their chief economist and I had several meetings with this group. I know that they were working diligently. However, it certainly is not obvious from the bill, which tells us virtually nothing, why the addition of one more body in the bowels of the federal bureaucracy would improve financial literacy better than the work being carried out by the Canadian Foundation for Economic Education.

In the end, the issue I have with the bill is that we simply do not know what the government is planning to do. We do know that it may involve taxing banks. We know that it may involve spending more government funds, but we have no idea how much. We do not know the size of this new organization. We do not know which of the other recommendations from the Task Force on Financial Literacy would be carried out. We know very little, virtually nothing about it.

As I said at the outset, improving financial literacy is an important task for the federal government. However, we have concerns on this side of the House that the newly created financial literacy leader would not be able to carry out his important task.

There is another side of this coin. We can talk about the need for greater financial literacy on the part of Canadians, but we can also talk about the problem of financial illiteracy on the part of the Conservative government.

I would like to say a few words on the financial illiteracy of the Conservative government. I think if there needs to be a course in financial literacy, the first ones to enrol in such a course should probably be the members sitting opposite.

My first example of Conservative financial illiteracy goes way back to 2006. Prior to the arrival of the current government in 2006, for many years Canadians had to have at least a 5% down payment on a mortgage. The longest mortgage they could get was 25 years. What did these financial wizards do in 2006? Instead of a 25 year maximum period, they made it 40 years.

Instead of a 5% minimum down payment, they made it zero. Brilliant. Magic. People could get a zero down payment mortgage for 40 years under the Conservative government.

Now, the problem is that this is like the subprime mortgages in the U.S. Eventually, they found out, but did not admit it because the Conservatives would never admit they made a mistake. They discovered they had made a mistake, so they put it back from 40 years down to 35 years, and they brought the minimum payment up from zero to 5%. Then they claimed credit for tightening the system.

However, the system is not back to where it was when the Conservatives arrived. It is still looser. That is the first example of financial illiteracy.

So I suggest that the Minister of Finance and some of his colleagues enrol in financial literacy 101. If they do, maybe their performance will improve.

The second example of financial illiteracy is the fact that the Conservatives were so lucky when they inherited a massive $13 billion Liberal surplus when they came to power. Then they proceeded to spend like drunken sailors. They are the biggest spenders in Canadian history, to the point where these Conservatives actually ate through all that surplus and went into deficit before the recession began.

That is a second reason for the Minister of Finance to enrol in that course which I shall call financial literacy 101. It is important to have a prudent fiscal policy. It is not good financial literacy to blow through a $13 billion surplus by spending madly when the economy is strong. One might have a deficit when the economy is weak, but one should not run through a surplus when times are good, with massive spending just before a recession begins.

I have a third example of this government’s lack of financial literacy. That is its plan for massive cuts in government spending at a time when the Canadian economy is very fragile. It is suggesting reductions on the order of $4 billion or even $8 billion in public spending and reductions of government services to Canadians. It will be doing this at a time when the economy is very weak.

Let us not forget that unemployment remains high; let us not forget that there is a crisis in Europe; let us not forget that the U.S. economy is extremely weak.

We are living in a world where the unemployment rate remains too high and where the level of risk is very high everywhere, compared with the past.

In this context of a hugely fragile weak economy, anyone who went through financial literacy 101 would know that this is not the moment to have massive cuts in government spending, massive layoffs of public servants and massive reductions in the services provided to Canadians. It is not a good idea.

Members do not have to believe me, I will invoke the name of Christine Lagarde, managing director of the IMF. The IMF is the mother of all fiscally prudent people. Typically the IMF calls for countries to cut. Christine Lagarde recently said that countries which have room, and this might not include Greece but it certainly includes Canada, should in the short run focus on measures to create jobs and support the economy, and in the medium term they should have a credible plan to balance the books and bring down debt. That is not me talking, that is the head of the IMF. The chief economist of BMO had said something similar, that making massive cuts at this time is as crazy as what Herbert Hoover did in the U.S. during the Great Depression.

As I said earlier, I think members of the government, maybe even the Prime Minister, might like to enrol in this course which we could set up called financial literacy 101.

If they do this, there will be at least three subjects. The first is that it is not smart to have mortgages amortized over 40 years with no capital outlay. That makes no sense. We saw this in the United States, but this government changed the system for the worse in 2006. Second, when you inherit a $13 billion surplus, it is not financially prudent to spend all of those funds when the economy is strong and to go into deficit even before the recession. That is not a good example of financial literacy.

That is what this Conservative government did: it did not demonstrate sound financial literacy. As I just said, it is not a good idea to make massive budget cuts in government investments and have monumental job losses in the public sector when the economy is weak and the global economic system is very fragile. That too is not a good idea.

In conclusion, in terms of the mark that the bill deserves, it got 1 of the recommendations out of 30 half right, so is one-half of one out of 30, which is a failure. Also, in terms of the three subjects for a financial literacy class 101, which I recommended for the government, it fails on all three.

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4 p.m.

Conservative

Laurie Hawn Edmonton Centre, AB

Mr. Speaker, I always listen with attention and sometimes amusement to my friend across the way who has a self-exalted position of being the financial guru of the western world.

It is easy to run a surplus when one has unlimited powers of confiscation and taxation. In bragging about the $13 billion surplus, I would remind the hon. member that it was courtesy of the $60 billion confiscated from pension funds for the public service, RCMP and the Canadian Forces, and another $50 billion confiscated from the EI fund. It does not take a financial genius to run a surplus with that kind of power.

Has the hon. member understood or listened to any of the people around the world whose main comment, when talking about Canada and the strength of the Canadian economy and its unemployment and employment situation, is they wish they were in fact in Canada?

I know we can never come up to the hon. member's self-exalted standards, but will he admit that financial literacy is important and that any step in that direction is valuable, whether it comes up to his marvellous standards or not?

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4 p.m.

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, I consider myself a relatively modest person. I am not claiming exalted status.

In response to his question, may I remind the member that the two main reasons for Canada's relatively strong position are both thanks to the Liberal governments of Paul Martin and Jean Chrétien. When we came into power in 1993, we inherited a $42 billion Conservative deficit. In relative terms, that was much bigger in those days than it would be today. We got rid of that deficit pretty fast. We paid down debt. That is why, instead of inheriting a $42 billion deficit from us, as we did, the Conservatives inherited a $13 billion surplus and then blew it.

Also, we saved the banks because we refused to deregulate. Those guys over there wanted to go all the way to bank deregulation. That would have been a disaster.